2011 (1) TMI 1349 - AT - Income Tax

Summary

Issues Involved:
1. Rejection of Book Result
2. Estimate of Gross Profit

Rejection of Book Result:
The appeal by the assessee challenges the order of CIT(A) confirming the rejection of Book Result due to the destruction of books and records in floods. The appellant argued that the mere fall in gross profit, without specific defects pointed out, should not lead to rejection. However, the Assessing Officer found discrepancies and added the difference in gross profit to the income. As the books of account were destroyed and the appellant failed to provide alternative evidence, the rejection of books was upheld, leading to the dismissal of this issue.

Estimate of Gross Profit:
The second issue raised by the assessee concerns the estimation of gross profit at Rs. 14,61,504, which was confirmed by CIT(A). The Assessing Officer based this estimation on the average profit of the last three years, considering the decline in gross profit. The options considered included extending the previous year's gross profit percentage or the average profit of the last three years. Ultimately, the gross profit was estimated at 33.97%, resulting in the addition of Rs. 14,61,504 to the income. The appellant contested this estimation, arguing that the reasons for the fall in profit were provided and not rejected. However, the estimation was upheld based on the available data and calculations presented during the assessment proceedings.